Sonos Faces Takeover Speculation
Audio equipment maker Sonos is facing growing takeover speculation after recent troubles that have seen its market value drop to $1.7 billion from more than $5 billion at the peak of the pandemic.
Leadership Changes and Potential Buyers
A recent change in company leadership, as a result of which the CEO Patrick Spence and its Product Director Maxim Bouvat-Merlin‘s departure last week, intensified discussions about potential buyers. Bloomberg Mark Gurman speculated glasses to Spotify and Amazon as the most likely bidders, each of which would bring unique advantages for a potential acquisition.
Gurman indicated that Amazon seemed “the most natural option,” particularly following the appointment of former Microsoft executive Panos Panay to lead hardware development. Acquiring Sonos could enhance Amazon’s Echo line of devices with premium audio technology, he stated.
“Amazon could certainly afford to buy Sonos,” Gurman asserted. However, he cautioned that the company might encounter regulatory scrutiny similar to its troubled attempt to acquire iRobot, the maker of Roomba.
On the other hand, music streaming giant Spotify may face fewer regulatory obstacles due to its European roots, Gurman noted. This acquisition would allow Spotify immediate entry into the hardware market. In 2021, Spotify transitioned into hardware after launching a smart car device called Car Thing. However, less than three years post-launch, the product was discontinued, and Spotify admitted that the market for Car Thing was not as anticipated.
“Spotify has wanted to get into hardware for a long time, but has struggled to do so. Sonos will give them instant entry with a great set of products that can support their audio services,” Gurman explained.
Other potential buyers include Samsung Electronics, which is battling to gain traction in the home speaker market despite owning the Harman brand. Acquiring Sonos could bolster its home audio offerings. Roku, with its existing soundbar and speaker lineup, could also gain, although a stock-based deal might be necessary due to Roku’s limited cash reserves, Gurman observed.
Bloomberg chief correspondent remarked that although larger tech companies like Apple, Google, and Meta could be potential buyers, they are unlikely candidates due to existing strategies and previous relationships with Sonos.
Apple could purchase Sonos for around $2 billion—less than what it spent on Beats—and Sonos hardware could help improve Apple’s subpar position in the HomePod and home audio market, Gurman suggested.
“But I don’t believe Apple will ever acquire Sonos. If Apple really wanted to enhance its home audio business, it already has the hardware, software, content, and manufacturing capabilities. It’s just about wanting to do it right—something Apple is already working on,” he stated.
Rumors surrounding a sale of Sonos emerge as the company works to recover from challenges, including a problematic software update launched in May 2024, which impacted its product ecosystem. Three months later, the company laid off around 100 employees, or 6% of its workforce.
The company reported last week that Spence’s departure as CEO is “unrelated” to Sonos’ fiscal first quarter (calendar fourth quarter) results, which are set to be released on February 6, 2025. The company mentioned it “does not currently provide updates.”
In the fourth fiscal quarter of 2024, ending in September, Sonos’ revenue declined 8% y/y to US$1.52 billion, which the company attributed to “lower demand due to challenging market conditions and issues from the recent rollout of our app.”
Bloomberg Gurman noted that the best-case scenario for consumers would be for Sonos to remain an independent entity.
Sonos takeover speculation grows, with Spotify or Amazon seen as likely suitors (report)
